The performance of steel direct exports and indirect exports exceeding expectations this year has made up for the relative lack of steel domestic demand, which plays an important role in consuming existing inventories and easing supply pressure. Looking forward to the fourth quarter of this year, the manufacturing export new orders index continued to rise, with the continued support of the "stable foreign trade" policy, it is expected that China's direct and indirect exports of steel or continue to maintain a certain resilience.
Since the beginning of this year, the production of molten iron has remained high and exceeded expectations repeatedly, making the production of crude steel maintain a high position. Although the sound of "crude steel flat control" resumed in August, the supply reduction was expected to ferment, but the reality did not materialize. And how will demand absorb the rising supply? It can be seen that the total demand for steel has undergone major structural changes this year. In the past steel traditional domestic demand, real estate is still in the process of repair from the bottom of the cycle, and favorable policies are frequent, but it is expected to take time to reverse; Infrastructure and manufacturing maintain stability, the overall proportion is large, but decreased. Looking at external demand, steel exports have increased in the case of optimistic profits, becoming a powerful engine to ease supply pressure and stabilize production of steel mills. Steel export data bright, why?
From January to August, China exported 59.47 million tons of steel, a cumulative increase of 28% over the same period last year, an increase of 13.18 million tons. Among them, 7.42 million tons of bars, a cumulative increase of 50%; Angle steel and section steel 3.3 million tons, a cumulative increase of 38%; 38.68 million tons of sheet metal, a cumulative increase of 26%; Wire 1.66 million tons, a cumulative increase of 19%.
There are four reasons for the strong direct exports. First, in February, Turkey (the world's eighth largest crude steel production) earthquake, the epicenter is located in the province of Kazhlaman Marash Pazarzek and Erbistan city, affected areas have many large steel manufacturers, including Erdmeir, Isdemir (long process steel mills, production of sheet metal) shut down, Turkey's crude steel production in the first half of this year 15.92 million tons. Compared with the first half of last year, the decrease of 3.018 million tons, the short-term supply gap caused by production disruption and post-disaster reconstruction, giving China a better export opportunity. Second, China's steel prices are relatively low this year, while international prices are relatively high, and better profits and price spreads provide impetus for steel exports. Although from the perspective of previous years, steel exports in the second half of the year will generally be seasonally weaker, but the current North China hot coil exports still have profits, thread export profits remain near 350 yuan/ton, is still a very high level, supporting the rapid growth of the main export force sheet end and the excellent performance of the new force bar end. Third, the exchange rate is an important reason for the current high export profits. Fourth, the existence of paying for exports, a group of enterprises or individuals without export rights to other authorized import and export companies to buy a set of legal export declaration information to export steel overseas. The above four factors are the motivation to support the strong direct export of steel.
Indirect export industries include automobiles, home appliances, ships, motors, containers, machinery, etc. According to our calculation, the indirect export volume of steel from January to August was about 24 million tons, an increase of 16% year-on-year. The good performance of the indirect export of steel forms a good resonance support with the direct export. First, this year's domestic auto industry production and sales are booming, exports are also good (January to August cumulative growth of 53%). The export advantage is mainly reflected in new energy vehicles, China's oil vehicles compared with developed countries, the brand impact is not high, but in the field of new energy vehicles, the overseas penetration rate is relatively low, the space is larger, so China's new energy vehicle exports are popular overseas. Second, in the home appliance industry, the depreciation of the renminbi coupled with international freight and sea freight are not expensive, and overseas dealers are strong in stock replenishment. In addition, European and American households stored food during the epidemic, making refrigerator demand overdrawn in advance, so washing machines are the strongest end of home appliance exports this year. Third, the machinery industry, construction machinery exports benefit from the "Belt and Road" construction, consumer machinery (packaging machinery, etc.) benefit from overseas industrial automation demand, performance is better.
On the whole, the performance of steel direct exports and indirect exports exceeding expectations this year has made up for the relative lack of steel domestic demand, which plays an important role in consuming existing inventories and easing supply pressure. Looking forward to the fourth quarter of this year, the manufacturing export new orders index continued to rise, with the continued support of the "stable foreign trade" policy, it is expected that China's direct and indirect exports of steel or continue to maintain a certain resilience.
